Cheque: Cheque refers to a negotiable instrument that contains an unconditional order to the bank to pay a certain sum mentioned in the instrument, from the drawers account, to the person to whom it is issued, or to the order of the specified person or the bearer. Parties to Cheque:Basically, there are three parties to a cheque:Drawer: The person who draws the cheque, i. e. signs and orders the bank to pay the sum. Drawee: The bank on which the cheque is drawn or who is directed to pay the specified sum written on the cheque. Payee: The beneficiary, i. e. to whom the amount is to be paid. Apart from these three, there are two more parties to a cheque:Endorser: When a party transfers his right to take the payment to another party, he/she is called an endorser. Endorsee: The party in whose favor, the right is transferred, is called endorsee. Sometimes, the drawer and payee can be the same person, when the drawer writes a self-cheque. If it is a bearer cheque, the person in whose name it is made is a holder. If it is damaged the payee or the last endorsee is the holder. Therefore, Option 2 is the correct option.